Insider Chatter by Donna Bogatin

Thw Wall Street Journal claims the richest man in the world scaling back on his “social graph” usage is ”the most damning indictment of ”social networking technology.” REALLY? Bill Gates is also scaling back on what he does at the company he founded, Microsoft: Any personal computer technology “indictment” there?

There was a Facebook indictment yesterday, it came form MySpace. Arnie Gullov-Singh, VP Product Mangement, Fox Interactive Media, had his competitive “social networking technology” fun at the OMMA Behavioral conference in New York City, at the expense of Facebook, as I present in MySpace to Facebook: NO ‘Reach, Relevancy, Results’! OMMA Report.

I asked Gullov-Sing about the future prospects for MySpace advertising, both in-house prime and the lower grade, out sourced Google variety. My question to panelist Gullov-Singh:

I appreciate your calling Facebook a “competitor”; Mark Zuckerberg refuses to return the favor. 

In any event, do social networks risk becoming too popular for their own good? As user generated content grows like a weed, what will be the impact on ad quality and pricing? Will users be subjected to more “punch the monkey” ads?

Gullov-Sing avoided the seemingly undeniable inventory glut issue, hailing MySpace is popular among advertisers and its CPMS are doing just fine, while offering no hard data to support his contentions.

After the panel, I sought specifics from Gullov-Sing and pointed out that MySpace partner Google itself lamented MySpace ad quality and pricing, in an indirect dig during its Wall Street conference call.

Gullov-Sing told me that there are a lot of reasons for Google not doing well at MySpace. I suggested to Gullov-Sing that perhaps MySpace is not providing necessasry internal MySpace data to Google so it is best able to optimize.

Gullov-Sing indicated to me that Google doesn’t understand the sales process and thinks technology is the answer to everything.

If Google really did learn how to sell advertising like the rest of the media world, though, would its MySpace performance really improve? After all, MySpace has its direct hands on the “good” MySpace ads goods, while Google is an outside ad serving player, playing around with runnerup inventory.

MySpace inventory distribution appears to match the industry standard put forth at the OMMA conference by Peter Horan. The CEO of IAC Media & Advertising said a sites’ advertising is generally about half direct-sale, premium ad inventory and half of lower quality, resold by aggregators.

I have been questioning the quality and “salability” of MySpace’s inventory available to Google since the $900 million deal was announced in 2006 during a joint Fox Interactive Media and Google conference call.

Fox Interactive has continued to retain exclusive rights to directly sell its most desirable, and most lucrative, display advertising to Fortune 500 advertisers. In addition to Google being exclusive search and keyword targeted advertising sales provider, the agreement has provided for Google to have an option on My Space’s unsold, “remnant” display advertising: a “right of first refusal on display advertising sold through third parties on Fox Interactive Media’s network.”

Google CEO Eric Schmidt was well aware of the MySpace monetization challenge when he made a long term, expensive pledge to MySpace, but believed the vaunted Googley technology would prevail. Schmidt in 2006:

“We are not going to cover MySpace with ads,” he said, noting that Google carefully analyzes what sort of ads encourage users to click on what sort of pages to produce the most revenue. “It turns out the right answer is to show fewer, better ads.” (NYT)

It turns out, though, that Schmidt’s Google did NOT, and still does not, have the right MySpace answer, demeuring now that Google is “still in the learning stages of how it monetizes social networking”:

We have had a challenge in Q4 with social networking inventory as a whole and some of the monetization work we were doing there didn’t pan out as well as we had hoped. But we are continuing the efforts and we are still optimistic about future quarters.

MySpace, on the other hand, is optimistic about the present! 

PLUS: MySpace To Google (Round 2): Text Clicks Do NOT Rule! VideoEgg Report

MORE: MOBILE Visions? Microsoft, Yahoo, AOL Open Up: NOT Google! OMMA Report and Henry Blodget Tech Ticker Puts Yahoo Finance at SEC Risk and LinkedIn Preps Spy Network: Is YOUR Company Safe?

CONTACT DONNA BOGATIN

The Web’s social media evangelist/consultant enthusiasm for FastCompany.com’s remake in user generated content fashion was notable in its intentsity, led by Fast Company’s Ed Sussman himself. Patting himself on the back for a year’s worth of digital work on behalf of his employer, Mansueto, publisher of Fast Company, Sussman headlined with conviction how “FastCompany.com will alter the digital landscape.”

BUT, is Fast Company really the first to “get it,” as Sussman asserts? It is rarely prudent to unveil a new, unproven product with such lofty definitive pronouncments. Sussman has succeded at one opening salvo, though: Blogosphere regurgitation of his PR spin about just how landscape altering the latest underpopulated social media “community” platform to sprout up on the Web is:

Chris Brogan: “Fast company goes SUPER social, totally social crazy”
Jason Falls: “Fast Company leads with microcommunity home run”

Fast Company “home run”? Their social game has barely begun! What is really so extraordinary about a media publication launching and/or acquiring a Web-based community platform? MSNBC, USA Today, NYT…

Nevertheless, Fast Company collaborator Shel Israel, in not so naked fashion, dutifully seconds the Fast Company “significant” pitch that “it is the most interactive of sites from a major media company.” The “major media company” Mansueto, publisher of niche properties Inc. and Fast Company, is more of a slow Web follower.

Israel does, unwittingly, reveal where FastCompany.com stands though:

The more advice we get from your kind of crowd, the better FastCompany will become.

Such an incestuous “our crowd” stance is what actually hampers FastCompany out of the gate. When I explored the site upon its launch, I was hit with social media consultant self-promos, repostings from social media blogs and blatant spam.

The perennial “web strategist” had his own re-posted blog post about Fast Company itself as the lead “community” feature, Jeremiah Owyang’s “initial analysis.” The strategist begins by underscoring that he “watches the online community space very closely.” Odd then, that Owyang is flip-flopping about one of the most important aspects of the “space”: Monetization.

Earlier in the week, Owyang and fellow Forrester Research staffers Josh Bernoff, Charlene Li and Christine Spivey Overby, “put their heads together” and declared “how social media will thrive” in a recession because it “tends to have lower cost than other forms of marketing.”

I countered, however, that social media is “cheap” for a good reason, it is only worth low CPMs to marketers. SEE: Multiply.com CEO to Facebook, MySpace: STOP Claiming to be Real-Life Social Networks, INTERVIEW

Jeremiah is proud of how he “listens.” Perhaps he read my piece, then. After all, he says now of Fast Company, just days after Forrester made a big public pitch for its social media “effectiveness” PR talking points, that “WITH THE MANY REPORTS SHOWING THAT ADVERTISING ON SOCIAL NETWORKS IS INEFFECTIVE, HOW WILL FAST COMPANY MONETIZE?

REALLY? Not Owyang’s Forrester report of days ago! Will Forrester make up its mind and/or get its semantic positioning straight?

Forrester’s Bernoff himself is backing away from his original “lead” prognistications, claiming semantic misunderstanding, and “clarifying” the “groundswell” that “social applications,” will soon “thrive,” not “social media.” Owyang clearly headlined “social media,” however, and Bernoff still cheers for (parts of) Facebook; So much for semantic back peddaling!

How about FastCompany.com? Monetization is NOT its current priority as it needs to find a community to monetize.

Perhaps Mr. Sussman ought to really join his own community himself: Sussman’s Fast Company blog “Media Maze” alerts “!!!No blog posts have been written for this blog yet!!!

Fast Company may be relying on Robert Scoble to put them on the social media map, but the Scobleizer’s startup video track record is not yet one for the record books.  

ALSO: Yahoos Rally: Beware Sticky Peanut Butter Tales  and How Web 2.0 Meetups Displaced the New York Software Industry and LinkedIn Preps Spy Network: Is YOUR Company Safe?

CONTACT DONNA BOGATIN

Think Mark Zuckerberg’s Beacon is scary? Reid Hoffman has some user “tracking” of his own in store.

In November, The Washingotn Post reported the sad tale of how Facebook “ruined” Facebooker Sean Lane’s Christmas when Mark Zuckerberg conspired with Overstock to alert his “friends,” including his wife, of his happy (supposedly surprise) purchase of a diamond ring, for his wife.

Reid Hoffman may soon have some (serious) unwelcome surprises of his own, for the thousands of companies represented within the “rich profile data” of “17 million professionals” hailed by LinkedIn as the “largest group of business decision makers on the Web.”   

LinkedIn’s Mike Gamson is touting an impending fee-based “Research Network” aimed at capitalizing on the reams of data LinkedIn houses on those millions of people:

The service will help hedge fund managers and investment banks find people who used to work at a company they’re interested in, or even who is working for a customer of a company they are interested in. (as cited by eWeek)

In other words, insider corporate intelligence, or espionage:

Let’s say I’m thinking about making an investment in a producer of product X. I might want to speak to people that sell that product, people that buy that product, or that used to work at that company as part of my research process to have a better understanding of how valuable that product is.

BUT, “let’s say” the “producer of product X” does NOT want current or past employees talking to hedge funds and investment banks about its proprietary, confidential, insider goings on. LinkedIn’s financial incentives to its “17 million professionals” may nevertheless be hard to resist. Gamson boasts, “If we can begin to help our members make money and help our clients find the right people, that’s when you create value on both sides and we like those situations.”

Corporations about which LinkedIn users divulge insider information to hedge funds and investment banks, however, will undoubtedly NOT “like those situations.”

Barron’s Business Dictionary on corporate espionage: 

Act of spying. An example is spying on the activities of another company by improperly gathering information about the competing company’s new products or practices. Usually the spy is paid a fee for the information obtained.

The danger of corporate espionage, according to The SANS Institute: 

Corporate espionage is a threat to any business whose livelihood depends on information. The information sought after could be client lists, supplier agreements, personnel records, research documents, prototype plans for a new product or service. Any of this information could be of great financial benefit to a scrupulous individual or competitor, while having a devastating financial effect on a company. Just about any information gathered from a company could be used to commit scams, credit card fraud, blackmail, extortion or just plain malice against the company or the people who work there.

In Web-based social networking, six figure Fortune 500 execs seek the discretion and confidentiality that LinkedIn uniquely offers, Reid Hoffman has indicated to me. The “LinkedIn Research Network” appears to thwart such desired privacy, however.

The “LinkedIn Research Network” also appears to contradict the spirit of LinkedIn’s Privacy Policy which asserts “We will never sell, rent, or otherwise provide your personally identifiable information to any third parties for marketing purposes.” How then will LinkedIn market its “Research Network” company-specific “expertise”?

What’s more, LinkedIn’s “primary research service” risks impacting non-disclosure and confidentiality agreements and insider trading restrictions.

Linkedin claims a “simple philosophy”: relationships matter. YES, but the way relationships are monetized matters as well.    

MORE: AP On LinkedIn: Social Networking Gold Mine at $5 per User? and Reid Hoffman: LinkedIn About Face (book) and Beacon Privacy Solution: STOP USING FACEBOOK! and Multiply.com CEO to Facebook, MySpace: STOP Claiming to be Real-Life Social Networks, INTERVIEW

PLUS: Google Apps Meets Les Miserables: Enterprise IT Team DREAMS Big and Why Silicon Alley VCs Should Do Blogging Due Diligence, Too

CONTACT DONNA BOGATIN

How much is a brand ‘friend’ worth online? Priceless, really, in the digital eyes of OMD Digital US Director, Scott Hagedorn. In his opening keynote at the Digital Media & Measurement conference in New York City, Hagedorn briefed an audience of about 200 ad agency execs, brand marketers, consumer researchers…on how Doritos aims to ‘crash the Superbowl,’ again, thanks to YOU!

The 2007 Doritos Super Bowl UGC campaign generated $36 million in ’ad equivalency’ and helped drive a double digit year over year increase in sales, according to Hagedorn. Despite such hard performance metrics, however, Doritos is paying more attention to making Superbowl friends, rather than money, this super go around. What a difference 15 months makes? Isobar has struggled in the past to convince client Adidas of the value of 60,000 MySpace “friends.“Hagedorn underscored that online friends rule and he proudly beamed that Doritos is winning the friending race, with Doritos’ 15, 819 Super Bowl 2008 friends dwarfing even Burger King’s 3000 friends!

If the MySpace rasion d’etre is to promote the unfettered creation of user-generated content, wouldn’t advertisers be missing out on the real MySpace experience if they advertise against “non” MySpace content. Moreover, do MySpace friends even visit the “non” MySpace protected areas in MySpace?, I asked John Trimble, SVP Branded Sales, FOX Interactive Media, in the Fall of 2006. Trimble made a “protected area” brand sales pitch at an IAB Summit, asserting that MySpace is where the “sizzle” is and putting the “best” MySpace face forward, a sanitized one.

Fifteen months later, as MySpace plows ahead with its safe, “non” MySpace “mainstream,” content agenda, The New York Times now also wonders if News corp.’s crossover dreams are compatible with the desires of Tom Anderson’s 221,416,999 friends: 

The original content may draw advertisers who are wary of placing a marketing message next to a messy profile page, but it is unclear whether the users who make MySpace the most-viewed Web site in America will want to watch TV episodes and chat with friends on the same site.

The MySpace nemesis, Facebook, believes it has accomplished an integrated social network brand advertising coup, by using Facebook users, often unbeknownst to the users themselves, as smiling product spokespeople in high-quality brand ads on users’ “friends’” Facebook profiles.

What about Multiply.com, a site launched almost four years ago, which “effectively defined the new field of social communications,” according to founder and CEO Peter Pezaris?

Multiply.com obtained a $16.6 million Series B round of venture capital financing last fall and I chatted with Pezaris and David Scott Carlick, the Vantage Point Venture Partners Managing Director which joined the Multipy board as part of the firm’s investment.

Pezaris and company continue to put forth a strong value proposition for users, but what about for high quality brand advertisers that are essential for the success of Multiply’s traditional media monetization model? 

Carlick told me in September he looks to Multiply–and all the social neworking players–to further educate brand advertisers about the under utilized power of reaching consumers in new, peer-to-peer environments where the users create all the content. Multiply sported Google AdSense, but Carlick derided it as “backfill” which does not enhance user experience. Both Carlick and Pezaris indicated to me they envisage a Multiply monetized by high quality brand advertisers seeking to directly engage with real people as they interact with friends and family in their own personal online spaces.

MySpace and Facebook are apparently succeeding in educating brands about the real power of real people.  

Where does Multiply stand four months later on its drive for higher CPM, brand advertising? Pezaris’ own Multiply profile page sports low CPM style banner ads for the likes of ringtones and domain name sales AND “backfill” Google AdSense.

Pezaris is now touting “numerous changes to Multiply with a focus on site optimization, such as an Ajax based interface for browsing therough photos within an album.”

Pezaris is particularly proud of his focus on the Multiply user experience, come what may. The Multiply CEO told me:

One side effect of this change is that we are knowingly deflating our page view numbers and ratings and rankings. Unlike other social networking and media sites that are primarily focused on numbers for the sake of a quick sell out, we are in this for the long haul and user experience continues to be our number one product development priority!

Which social networking sites are looking for a “quick sell out”? MySpace is long sold and Facebook is not for sale, we hear time and time again. BUT, what about Multiply.com, really?

What is the real end game time table for Pezaris and Multiply investors? How/where/when does the real money kick-in for the Multiply.com business model? Multiply does not have the levels of traffic or brand recognition that MySpace and Facebook enjoy.

How long will investors continue to fund Multiply.com? Will Multiply soon be looking for a “quick” way out?

ALSO: Multiply.com Raises Consumer Media Stakes AND $16.6 million VC: INTERVIEW and Lending Club $108 billion Market Opp ex Facebook: Goodbye Banks! EXCLUSIVE INTERVIEW

PLUS: Scrabulous At Risk? Zynga $10 million VC Game: Facebook Roulette and AP On LinkedIn: Social Networking Gold Mine at $5 per User? and Why Zynga, NOT Scrabulous, Has a Lucky Facebook Charm and Facebook Davos PR Blitz: Beware Scoble Hype, Users Still at BIG Risk

CONTACT DONNA BOGATIN

Mr. Web 2.0 publicity himself, Michael TechCrunch Arrington, warns Mark Zuckerberg of the perils of too much publicity! Please “let sleeping dogs lie,” Arrington exhorts the Facebook founder and CEO, in soliciting him NOT to accept free publicity via a star turn on 60 minutes.

Arrington uses Wikipedia to support his claim that Facebook’s new social ads are “confusing” Facebookers and warns that Zuckerberg is “treading on thin publicity rights ice.”

What does Wikipedia know about “publicity rights”? Who knows, according to Wikipedia itself. The Wikipedia “publicity rights” entry disclaims “this article may require cleanup to meet Wikipedia’s quality standards. Please impprove this article if you can.”

Arrington, himself, has underscored how Wikipedia “needs to be fixed,” pointing out “the number of errors” on TechCrunch’s listing, while acknowledging fear of Wikipedians:

There is no way in hell I’d ever think about fixing those errors. The Wikipedia community has completely intimidated me to the point where making a change to that site is unthinkable.

Arrington intimidated? Now, that is news!

Another news flash: The Facebook legal team is well aware of the notion of “publicity rights” and addresses the issue repeatedly in various publicly posted terms and guidelines for use, warning users against infringement while appearing to clear the way for its own non-infringing actions:

When you post user content to the site, you authorize and direct us to make such copies thereof…grant to the company a fully paid worldwide license…for distributing such User Content for any purpose, commercial, advertising, or otherwise, on or in connection with the Site or the promotion thereof…

I have repeatedly warned against the inherent perils of maintaining Facebook accounts. Google, to boot.

Quibbling over the latest, not so greatest, Facebook and/or Google anti-user moves makes for ongoing fodder, but doesn’t resolve the core Facebook and Google non user friendly stances, as I have been underscoring for the past 18 months. SEE: 2008 Social Media Warning: Beware Google AND Facebook and Facebook: Harvard Dropout Tricks NYT? Zuckerberg is Coca-Cola Scapegoat and MoveOn’s Facebook Crusade: eBay, IAC, CBS, NYTimes Get Beacon Privacy Pass.

PLUS: YES! Facebook IS Scarier Than Google! and
Facebook is ‘Sorry’? Savvy Users Will Forget, NOT Forgive, Mark Zuckerberg and
Beacon Privacy Solution: STOP USING FACEBOOK! and
Dear Facebook, Beacon Tracking STILL Evil: Will Zuckerberg Partners Repent? and

Google Warning: How GOOG 411 Tricks Consumers and
Google Privacy Trap: Consumers Beware and
Google is WRONG On Consumer Privacy and
Google is NOT Your Friend 

ALSO: Henry Blodget Braces For ‘Harder Times’: Silicon Alley Insider ‘Screwed’? and Kelsey: You’ll Still Have Yellow Pages To Kick Around Some More

CONTACT DONNA BOGATIN